Opting for a gold loan has been the talk of the hour during the COVID-19 crisis. Here, people are in sole need of cash to fulfil their urgent financial requirements. This kind of loan ticks all borrowers’ criteria, from zero processing fees charged to quick, efficient services. As a result, they are preferred widely by most people around the country. 

 

However, sometimes, people tend to make mistakes that might cost them a lot less. Many things can go wrong, from being under the impression that you can get the lowest gold loan rate to choosing the wrong repayment option. 

7 Mistakes To Avoid While Opting For A Gold Loan

In this article, we have discussed several things that might go wrong and what is best avoided so that opting for a loan is auspicious for you. Before opting for a loan from gold loan companies, it will be best if you take a thorough look at all of the factors mentioned below so that you make the most of it in no time. 

  • Allowing High-Interest Rate For Gold Loan In Return For High LTV

According to RBI, the Loan to Value ratio of the gold loans issued by gold loan companies is a maximum of 75% of the secured gold amount.

To grant higher LTV, some companies offer a high gold loan rate. This should be avoided as far as possible, as it may cause problems in the future. 

  • Selecting The Wrong Gold Loan Repayment Option

A common mistake that borrowers make is to opt for the wrong repayment option amongst the other modes offered by gold loan companies. 

  • Being Unaware Of The Hidden Charges Apart From Gold Loan Rate

Apart from the interest rate for a gold loan, there may be other hidden charges like processing fees, foreclosure charges, disciplinary charges, and so much more. 

  • Not Thinking About The After-Consequences

While opting for a loan against gold, if the staff behaviour of gold loan companies is not up to the mark, you must think about the after-sales service. 

  • Not Opting For The Right Tenure

Choosing the loan tenure is entirely up to you and your preference. Also, the tenure you choose will greatly determine your interest rate for a gold loan. 

  • Not Having Thorough Knowledge Of Calculating Gold Loan Rate

Companies may often market their content so that you might feel that the interest rate for gold loans is quite low. But, you might end up paying a much higher interest amount. 

  • Not Considering The Auction Terms

If you fail to pay the principal value along with interest on time, the company is entitled to auction or sell your secured gold. Always make sure to understand the terms under which the jewellery may go for auction. 

The Bottom Line

We have provided you with a list of mistakes you should avoid while opting for a gold loan. This is only if you want to make the most of it. So, what are you waiting for? Read them thoroughly and sign up today.